May 15, 2020 / 7:15 PM / 12 days ago

UPDATE 1-U.S. natgas futures slide on forecasts for milder weather next week

 (Adds closing prices)
    May 15 (Reuters) - U.S. natural gas futures slipped on Friday on forecasts for milder weather and
less demand next week despite an outlook calling for higher temperatures and more air-conditioning use
in two weeks.
    Front-month gas futures for June delivery on the New York Mercantile Exchange fell 3.5 cents,
or 2.1%, to settle at $1.646 per million British thermal units.
    For the week, the contract was down about 10% after falling about 4% in the prior week.
    Government lockdowns to stop the spread of coronavirus have cut energy use, causing fuel prices and
exports to drop as businesses shut. U.S. crude futures are down about 50% this year. U.S.
producers have reacted quickly to the price collapse by shutting oil wells and slashing spending on new
drilling. Those oil wells also produce a lot of gas.
    But now that output is dropping, prices are expected to rise in the future as governments slowly
lift travel restrictions.
    U.S. gas for the balance of 2020 and calendar 2021 was trading much higher than
the front-month.
    The U.S. Energy Information Administration projected gas production will fall to an annual average
of 89.8 billion cubic feet per day (bcfd) in 2020 and 84.9 bcfd in 2021 from a record 92.2 bcfd in 2019.

    Data provider Refinitiv said average gas output in the U.S. Lower 48 states has fallen to 90.1 bcfd
so far in May, down from an eight-month low of 92.9 bcfd in April and an all-time monthly high of 95.4
bcfd in November.
    The EIA projected U.S. gas use - not including exports - will drop to an average of 81.7 bcfd in
2020 and 79.2 bcfd in 2021 from a record 85.0 bcfd in 2019.
    Refinitiv projected demand in the Lower 48 states, including exports, will fall from an average of
85.6 bcfd this week to 78.5 bcfd next week as the weather turns milder before increasing to 80.0 bcfd in
two weeks as summer approaches.
    Even though the coronavirus is reducing global gas use, the EIA still expects U.S. exports to hit
record highs in coming years as more LNG export plants and pipelines enter service. Still, the agency
has reduced its projections on the pace of that growth due to the pandemic.
    Refinitiv said U.S. LNG exports averaged 6.9 bcfd so far in May, down from a four-month low of 8.1
bcfd in April and an all-time high of 8.7 bcfd in February.
    U.S. gas prices for June at the Henry Hub benchmark in Louisiana have mostly traded over the Title
Transfer Facility (TTF) in the Netherlands since late April. As long as U.S. prices remain
over the European benchmark - Henry Hub is also trading over TTF for July and August
 - analysts said LNG buyers will keep canceling U.S. cargoes.
    In April, buyers canceled about 20 U.S. LNG cargoes due to be shipped in June.

    
                                       Week ended      Week ended    Year ago   Five-year   
                                          May 15        May 8         May 15     average    
                                        (Forecast)      (Actual)                  May 15    
 U.S. natgas storage (bcf):                +94            +103         +101        +87      
                                                                                            
                                                                                            
 Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days                         
 Two-Week Total Forecast               Current Day     Prior Day    Prior Year   10-Year    30-Year Norm
                                                                                   Norm     
 U.S. GFS HDDs                              32             31           75          63           54
 U.S. GFS CDDs                             105            104           78          82           85
 U.S. GFS TDDs                             137            135          153         145          139
                                                                                            
 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts                                      
                                        Prior Week    Current Week  Next Week   This Week    Five-Year
                                                                                Last Year   Average For
                                                                                               Month
 U.S. Supply (bcfd)                                                                               
                                                                                            
 U.S. Lower 48 Dry Production              90.2           90.1         89.7        89.0         77.0
 U.S. Imports from Canada                  5.9            5.8          6.1         7.6          7.8
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         96.1           96.0         95.8        96.6         84.9
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.5            2.1          2.1         2.6          1.9
 U.S. Exports to Mexico                    4.5            4.6          4.6         4.6          3.9
 U.S. LNG Exports                          7.3            6.6          6.3         5.8          2.0
 U.S. Commercial                           6.6            7.9          5.4         6.4          5.5
 U.S. Residential                          7.9            10.2         5.7         7.5          6.1
 U.S. Power Plant                          25.8           25.1         26.3        25.8         25.3
 U.S. Industrial                           22.1           22.6         21.6        22.0         20.6
 U.S. Plant Fuel                           4.5            4.5          4.4         4.5          4.5
 U.S. Pipe Distribution                    1.8            1.9          1.7         1.9          1.9
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    68.9           72.3         65.5        68.2         64.0
 Total U.S. Demand                         83.2           85.6         78.5        81.2         71.8
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.60           1.56                              
 Transco Z6 New York NG-CG-NY-SNL        1.05           1.19                              
 PG&E Citygate NG-CG-PGE-SNL             2.43           2.50                              
 Dominion South NG-PCN-APP-SNL           1.01           1.18                              
 Chicago Citygate NG-CG-CH-SNL           1.51           1.54                              
 Algonquin Citygate NG-CG-BS-SNL         1.06           1.21                              
 SoCal Citygate NG-SCL-CGT-SNL           1.64           1.72                              
 Waha Hub NG-WAH-WTX-SNL                 1.41           1.38                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             16.25          14.50                              
 PJM West EL-PK-PJMW-SNL                19.00          17.75                              
 Ercot North EL-PK-ERTN-SNL             21.00          22.00                              
 Mid C EL-PK-MIDC-SNL                   12.50          11.56                              
 Palo Verde EL-PK-PLVD-SNL              13.50          12.25                              
 SP-15 EL-PK-SP15-SNL                   13.00          12.00                              
 
 (Reporting by Scott DiSavino; Editing by Richard Chang)
  
 
 
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